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Every Phone Has Its Tone

The days of young people taking their allowance to the record store
and buying the latest LP are long gone. It used to be that keeping
on top of the latest music was a sure sign of how cool you were;
now it's all about having the latest mobile phone. Today's youth
have entered the mobile age and they're not looking back. Their
weekly allowance is being spent on ringtones, rather than Rolling
Stones, mobile games rather than Motley Crue.

According to the 2004 London-based mobileYouth report, released in
May, for Americans under 25, roughly 6 times more of their spending
goes to cell phones than to music purchases. This amounts to over
$22 billion, or 5.5 percent of their total spending. The
mobileYouth report details the effect of mobile technology on the
lives of young people aged 5-24. "Increasingly more and more young
people are being given mobile phones by their parents or buying
mobile phones on their own," explains mobileYouth analyst Wyndham
Lewis. "The music industry has claimed there's this direct
correlation between music theft and copyright issues. What we're
finding is that a lot of that money is being displaced and spent on
mobile phones."

Currently, almost 45 million under-25s own cell phones. mobileYouth
projects that number will grow 16 percent, to over 52 million, by
2006. Lewis expects that as youth continue to penetrate the mobile
market at high rates, the displacement of funds away from
traditional youth media will have more and more of an impact. "In
the next year there will be increasing interest by media content
providers to cash in on this [mobile youth trend]."

Sony Music Mobile has existed as a division since the fall of 2002,
specializing in providing mobile content, which includes mobile
wallpaper, screensavers and master ringtones. (For those not up on
mobile lingo, master ringtones, better known as truetones, are
mp3-like rings that can be downloaded to one's cell phone.) All of
this content is based around Sony's roster of artists and has
become an important part of marketing plans. "It's something that's
become a very standard and routine part of our normal operation.
Whenever we release a new record we try to have mobile content
available with that release," explains Thomas Gewecke, senior vice
president of business development for Sony Music Digital Services.

Sony is by no means alone in its attempts to tap into this mobile
youth market. Warner Music Group recently announced a partnership
with Mobileway, a California-based wireless entertainment and
marketing company. "[The deal] allows fan to use five-digit
short-codes to order mobile content directly to their phones from
their phones and get billed automatically," explains Michael Nash,
senior vice president of Internet strategy and business development
at Warner Music Group. "The Mobileway deal allows us to message the
fans directly in the context of the artist, for us it's putting the
marketing equation all together. We're targeting teenagers and
young adults with the artist they're really interested in and
allowing them to connect to them directly." Warner will be able to
put the five-digit codes onto all their marketing.

For all these companies, taking back some of the money displaced by
mobile will be increasingly important in the future, especially if
current music downloading trends continue. "We believe that in the
U.S. the mobile music market is going to be a $1 billion
dollar-plus market by 2007 or 2008. It's going to be a $5 to $10
billion global market in the same time period," Nash contends. "Key
drivers are finding how to address the youth and teen market who
are very interested in content in this way." There is little doubt
that youth will continue to push mobile content and spending in an
increasingly wireless world.